THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: Happening now -- President Bush warning Iran what could trigger what he's calling World War III. He's talking bluntly about Tehran's nuclear threat and his disagreement with Russia's president. But there's another nuclear question he's dodging. Also tonight, he's an actor and activist, and a leading supporter of Tibet's exiled spiritual leader, Richard Gere joins us here in THE SITUATION ROOM to talk about the Dalai Lama's prestigious award on Capitol Hill today, and the angry protest coming in now from China.

And the U.S. soldier in charge of Saddam Hussein's prison time may now be facing life behind bars himself. Tonight, charges of aiding the enemy, and whether the possible punishment fits the crime.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Tonight, some of the strongest language yet from President Bush about Iran's nuclear defiance. He's warning about the prospect of World War III, and he's firing back at Russia's president for appearing to take Iran's side in this nuclear showdown. Our White House Correspondent Ed Henry is watching all this unfold.

The president was very eager to talk about Iran today. But he was very eager not to talk about another supposedly nuclear-related issue.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. The president today took the rhetoric over Iran to a whole new level, but Mr. Bush's silence on another nuclear matter, Syria, was downright deafening.

(BEGIN VIDEOTAPE)

HENRY (voice over): In the starkest terms yet, President Bush warned of dire consequences if the nuclear ambitions of Iranian President Mahmoud Ahmadinejad, are not squelched.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If you're interested in avoiding World War III, it seems like you ought to be interested in preventing them from having knowledge for making a nuclear weapon. I take the threat of Iran with a nuclear weapon very seriously.

HENRY: That came as Russian President Vladimir Putin, after meeting with Iran's president, admonished the U.S. not to take military action against Tehran. And contradicted Mr. Bush, insisting Iran does not want to build nuclear weapons.

BUSH: If those are, in fact, his comments, I look forward to having him clarify those.

HENRY: When asked about Putin's plan to keep power by becoming prime minister, the president took a shot at his ally.

BUSH: When I saw him in Australia, I tried to, you know, get it out of him who is going to be his successor, and what he intended to do. He was wily. He wouldn't tip his hand.

HENRY: Mr. Bush was far less candid about Syria's nuclear ambitions. For the second straight press conference, shutting down all questions about Israel's strike against an alleged nuclear site in Syria.

QUESTION: Can I ask you whether --

BUSH: You can ask me another question.

HENRY: The point is whether Israel has now set a precedent to eventually launch an attack against Iranian nuclear sites; echoes of 1981, when Israel used self-defense to justify a strike on an Iraqi nuclear reactor.

BUSH: I don't remember what I was doing in the 1980s. See, I was living in Midland, Texas. I don't remember my reaction that far back.

(END VIDEOTAPE)

HENRY: There's an obviously some very high-level intelligence on Syria that the president cannot discuss publicly. But his silence is raising eyebrows all over Washington about whether there's another powder keg brewing in Syria. You add that to what's going on in Iraq, as well as Iran, Wolf, and there are obviously a hot of hot spots in the Mideast.

BLITZER: Ed Henry at the White House. Thanks.

It's one of the few stable areas in Iraq, at least that's been the case. But now there's deep fear that northern Kurdish areas of Iraq could be plunged into violence. Turkey's parliament has given the go-ahead for Turkish troops to cross the border, into Iraq, in search of Kurdish separatists. President Bush says there are better ways to deal with the problem.

(BEGIN VIDEO CLIP)

BUSH: We are making it very clear to Turkey that we don't think it is in their interests to send troops into Iraq.

(END VIDEO CLIP)

Joining us now, our Senior Pentagon Correspondent Jamie McIntyre.

Jamie, what are the consequences if the Turks should move across the line, go into northern Iraq?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, it will be a mess for the U.S. military, because even if Turkey does not deny the U.S. the access to its airspace and air bases, just the fact that there's renewed conflict in the north, one area of Iraq that had been stable, will cut some of the supplies to U.S. troops.

The U.S. is putting a full-court press on both the Turkish government and the Kurdish government in the north to try to get them both to exercise some restraint. Right now, the betting at the Pentagon is despite Turkey's real anger and real threat that they may not actually move across the border. That's the betting here.

BLITZER: Ramifications for U.S. forces in the region and beyond, enormous. Jamie, thanks very much.

On Capitol Hill, right now, the fate of a resolution that could further strain U.S. relations with Turkey appears more uncertain than ever. The measure would label the killings of Armenians by Ottoman Turks, a century ago, as genocide. The House Speaker Nancy Pelosi acknowledged today that prospects of a vote on the resolution are now iffy. Her fellow House Democrat John Murtha says his party miscalculated support for the resolution, and that it will fail if a vote is held. That from John Murtha, a close ally of Nancy Pelosi.

Also tonight -- House Democrats may be loosing yet another battle, this one over domestic spying. A wiretap bill that President Bush promises to veto is now in limbo. A scheduled vote for today, simply never happened. Let's go to our Congressional Correspondent Jessica Yellin.

Jessica, is this legislation that the Democrats want that the White House opposes now going down in flames?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, certainly, Wolf, the match has been lit. Tonight Republicans are crowing and Democrats are trying to figure out what to do next.

In a nutshell, here's what happened. Right before that scheduled vote, Democrats yanked the bill off the floor, and decided they're going to delay any vote on it. Now, some Democratic sources tell CNN, it's because some members of their party on the left thought the bill gave the president still too much surveillance authority.

But others tell CNN, also Democrats, that it was all undone by a last-minute Republican move that would have made Democrats vote on whether this law would apply to Osama bin Laden. Republicans want a special exception in the bill that says none of this applies when they're hunting bin Laden or Al Qaeda. This created all sorts of confusion.

Democrats worried about the political consequences. And now Democrats are, again, huddling, trying to figure out what to do next. They insist, though, the bill will come to a vote next week -- Wolf.

BLITZER: President shows he can still stymie the Democrats on the Hill. Jessica, thanks very much.

Let's go to Jack Cafferty. He's watching all of this unfold from New York.

Jack.

JACK CAFFERTY, CNN ANCHOR, THE SITUATION ROOM: The cries are getting louder to do something about the tens of thousands of armed security contractors in Iraq. A September shooting involving Blackwater guards triggered outrage.

Iraqi officials say 17 people, including women and kids, were killed; 27 more were wounded. "The New York Times" report Defense Secretary Robert Gates is pushing now for all these contractors to report to a single authority. Most likely the American military. Senior commanders have apparently told Gates there needs to be a single chain of command overseeing the private security contractors.

But the State Department, which uses these people for security, wants the guards to continue to report to them. They acknowledge Blackwater needs tighter controls, but State says that they're sending out State Department personnel as monitors now on Blackwater convoys.

Here at home, the House overwhelmingly passed a bill that would bring all government contractors in Iraq under the jurisdiction of the U.S. criminal justice system. Now, a similar bill is pending in the Senate.

And, finally, Iraqis want Blackwater the hell out of their country. An official says Prime Minister Nouri al-Maliki is completely satisfied with the findings of his government's investigation that found Blackwater guards randomly shot those civilians without provocation.

So here's the question: What should be done with the tens of thousands of armed security contractors in Iraq? E-mail your answers to caffertyfile@cnn.com, or go to cnn.com/caffertyfile -- Wolf.

BLITZER: All right, thanks, Jack. See you in a few moments.

An American colonel may have given Saddam Hussein hair dye and Cuban cigars, but he faces much more serious charges, and possibly life in prison. Details of an extraordinary case, coming up.

Plus, Richard Gear, he's challenging China, but does he think boycotting the Olympics is good idea? He's here in THE SITUATION ROOM this hour.

Plus -- a CNN exclusive, an international manhunt to track down a child abuser. We're on patrol with police as they close in on their man. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: New details of the final days of Saddam Hussein are now coming out at the court-martial of an American military commander in charge of his captivity. CNN's Brian Todd is joining us now.

What's this commander, Brian, accused of having done?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, an extraordinary case here. This Army lieutenant colonel faces life in prison for allegedly aiding the enemy. We're told that charge does not relate directly to Saddam, but the case has revealed some fascinating details about Saddam's detention.

(BEGIN VIDEOTAPE)

TODD (voice over): His final days were supposed to be in strict confinement, at a maximum security camp near Baghdad run by the Americans. But Saddam Hussein may have been provided with Cuban cigars and hair dye courtesy of the U.S. military.

That's according to reports of witness testimony at the court- martial of Army Lieutenant Colonel William Steele. Commander at Camp Cropper where the former Iraqi dictator was held until his execution in December. Steele's not charged in connection with the cigars or hair dye, but is accused of aiding the enemy by providing an unmonitored cell phone to other detainees.

EUGENE FIDELL, NATIONAL INST. OF MILITARY JUSTICE: How far we've come from the Civil War from earlier conflicts from when aiding the enemy meant giving some food, or ammunition, or something like that. Now it's a cell phone.

TODD: One charge that Colonel Steele fraternized with the detainee's daughter was dropped, but other charges stand. In addition to adding the enemy, he's accused of unauthorized possession of classified information, conduct unbecoming an officer for an inappropriate relationship with a female interpreter, and failure to obey an order.

Steele pleaded not guilty and his defense attorney has reportedly said in court he was trying to treat detainees humanely. The military said his attorney could not speak to the media during the trial. Military officials waived a possible death sentence for aiding the enemy. But he still faces life in prison.

Compare that to the U.S. servicemen charged with abusing prisoners at Abu Ghraib, the harshest sentence for them, 10 years.

UNIDENTIFIED MALE: Without in any way minimizing what went on at Abu Ghraib, what's going on here, at least in theory, according to the government is a significant breach of security that calls into integrity the confinement system.

(END VIDEOTAPE)

TODD: Even if Colonel Steele is acquitted on the aiding the enemy charge, he's likely going to prison. Steele's already pleaded guilty to charges of mishandling classified information and possessing pornographic videos. The maximum possible sentence on those counts? Six years, Wolf. BLITZER: Brian Todd, reporting for us. Thanks very much.

Let's get to the campaign trail now, where the Republican presidential hopeful, Fred Thompson, has been conspicuously absent from some of the early presidential battle ground states. Our Chief National Correspondent John King is joining us now from Manchester, in New Hampshire.

How do Republicans in New Hampshire, this pivotal state, John, feel about this absence from former Senator Thompson?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, here in New Hampshire and across the country, many said when Fred Thompson entered the race, he was the great conservative hope. Now they say he's a giant question mark.

(BEGIN VIDEOTAPE)

KING (voice over): Dan Hughes was gung-ho about Fred Thompson, ready to help him organize New Hampshire like he did for Ronald Reagan nearly 30 years ago -- not anymore.

DAN HUGHES, NEW HAMPSHIRE GOP CANDIDATE: We can run a campaign, but we need a candidate.

KING: Hughes is now looking elsewhere because he said Thompson has all but abandoned the lead-off primary state.

HUGHES: The largest newspaper in the state, "The Union-Leader" ran an editorial saying, Where's Fred? That's kind of the whole thing in a gist.

KING: Thompson was scheduled to be in New Hampshire last weekend but canceled. He also, at the last minute, backed out of speaking at this big Republican fund-raiser in Washington Tuesday night. He did speak to a group of fiscal conservatives Wednesday, casting himself as their best hope.

FRED THOMPSON (R), PRESIDENTIAL CANDIDATE: I'm the most proven tax cutter and pro-growth guy running for president this year.

KING: But Thompson's inconsistent campaigning is proving costly.

WHITE AYRES, REPUBLICAN POLLSTER: It affected fundraisers. People want to be a winner. People want to give their money to somebody they think has the potential to go all the way.

KING: The latest CNN/Opinion Research Corporation poll showed Thompson with 19 percent nationally, down 8 points in a month.

AYRES: Looks like he's still more than a bit rusty and he needs to knock the rust off pretty quickly.

KING: In Iowa, Polk County GOP Chairman Ted Spuror (ph), has heard all the buzz.

UNIDENTIFIED MALE: I laugh at that. Thompson is waxing, not waning in Iowa.

KING: But Spuror (ph) is very quick to add a caveat.

UNIDENTIFIED MALE: If I were advising the Thompson campaign, I'd say you need to be in Iowa a lot more often than you have been. Because while there was time to make up for the lost time, that time is now.

KING: South Carolina is Thompson strongest early state. But even there, supporters say he needs to be more active.

(END VIDEOTAPE)

KING: The Thompson campaign promises the former senator will be more active very soon, but, Wolf, it's interesting increasingly, even top Thompson advisers are voicing their frustrations, not just with what they call the uninformed chattering class, but even with their own candidate. Saying he could quiet a lot of this criticism if he would campaign more aggressively and more passionately -- Wolf.

BLITZER: We'll see if he does that. John, thanks very much. John reporting from Manchester, New Hampshire.

This note to our viewers, on November 15th I'll be in Las Vegas, Nevada, to moderate a debate in that key Western state, among the Democratic presidential candidates. The Democratic candidates, in Vegas, November 15th with us.

The president and Congress defy China, the Dalai Lama honored today here in Washington despite some very harsh criticism coming in from China. We'll speak about it with Richard Gere. He's here in THE SITUATION ROOM.

And a killer infection is causing national alarm and some schools are closing. You're going to find out how to protect yourself. The are new developments tonight you need to know. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A Virginia school system is taking absolutely no chances with a potentially deadly strain of drug-resistant staph. Today it shut down several schools after a student became infected with the superbug -- and died. Let's go to CNN National Correspondent Jason Carroll -- Jason.

JASON CARROLL, CNN CORRESPONDENT: Well, Wolf, the schools were closed as a precaution. The hospital officials, though, out there will not confirm that the student had the deadly infection. But according to published reports, the student's mother, has confirmed it.

(BEGIN VIDEOTAPE)

CARROLL (voice over): Cleaning crews descended on 22 schools in Bedford, Virginia, disinfecting locker rooms and desks trying to prevent this deadly superbug from spreading. This after Ashton Bonds, a 17-year-old senior at Stanton River High School died. School officials say there's a possibility Bonds died from an aggressive infection. Methicillin-resistant Staphylococcus Aureus, known as MRSA, a mutated strain of staph infection.

RYAN EDWARDS, SPOKESMAN, BEDFORD CO. SCHOOLS: We have been dealing with MRSA for the better part of the past month, and we have had cases appear steadily since then. We have six confirmed cases, and possibly seven, within the county.

CARROLL: Doctors across the country are concerned as well. A new government study shows MRSA infections are more widespread than once thought. The study says MRSA may have contributed to nearly 19,000 deaths in 2005. More fatalities than those who died from AIDS that year. A figure some doctors call astounding.

DR. ELIZABETH BANCROFT, LOS ANGELES CO. HEALTH DEPT.: I would say that what this study is, is a wake-up call. And what we've seen prior to this time are studies in individual geographic locations, individual hospitals. And the key thing about this study, the strength of this study, is that it was really a nationwide, scientifically validated sample.

CARROLL: The study shows the majority of infections, 85 percent, occurred in hospitals and medical clinics, oftentimes through open wounds. But doctors are seeing more and more cases outside hospitals, especially among athletes playing contact sports.

Ricky Lannetti was a healthy 21-year-old football player for Lycoming College in Pennsylvania, until he showed up at an emergency room nearly unconscious.

TERRI LANNETTI, SON DIED OF MRSA: They didn't know what was wrong with him. They had no idea. It was one organ after another just started shutting down on him. It was that -- it was that quick. By 7:36 that night, he died.

CARROLL: Doctors think an open sore on Lannetti may have exposed him to MRSA in the locker room. Ashton Bonds played football, too. But stopped more than a year ago after being injured.

(END VIDEOTAPE)

CARROLL: School officials say, though, they'll continue cleaning on either a monthly or a quarterly basis. But they also stress that it's important for students to wash their hands as frequently as possible. They say that is just one of the easiest ways to prevent contamination -- Wolf.

BLITZER: All right, thanks very much, Jason, for that.

He's a big-time movie star, but Richard Gere is also a major activists for human rights in Tibet. He says he was surprised by today's ceremony honoring the Dalai Lama. He'll explain right here in THE SITUATION ROOM. My interview with Richard Gere coming up.

Also, embattled Senator Larry Craig. You won't believe what he says about all the recent publicity surrounding his recent arrest.

And finally, a presidential candidate not afraid to be a laughing stock. The comedian, Stephen Colbert's, unique campaign. That's coming up as well. Stick around, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now -- the attorney general nominee, Michael Mukasey, talking torture and drawing the line at his confirmation hearings in Washington today. Mukasey saying he does not believe the president has the legal authority to approve torture techniques.

And the president of Oral Roberts University announcing he's taking a temporary leave of absence amid allegations of serious misconduct. Richard Roberts denies accusations of lavishly spending school funds.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

China right now seething over a high-profile honor for the spiritual leader of millions of Buddhists, the Dalai Lama received the Congressional Gold Medal today, with President Bush looking on, after a private meeting with the Dalai Lama at the White House yesterday. Our State Department Correspondent Zain Verjee, has the latest -- Zain.

ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT: Wolf, China says it's outraged and is warning the U.S. it could damage relations.

(BEGIN VIDEOTAPE)

(VOICE OVER): This is a Chinese nightmare, a U.S. president giving a hand to the Dalai Lama, the Buddhist spiritual leader, on to the world stage.

BUSH: I will continue to urge the leaders of China, to welcome the Dalai Lama to China. They will find this good man to be a man of peace and reconciliation.

VERJEE: Mr. Bush gave the Dalai Lama the top honor for a civilian, the Congressional Gold Medal.

REP. NANCY PELOSI (D), SPEAKER OF THE HOUSE: For his many enduring and outstanding contributions to peace, nonviolence, human rights, and religious understanding.

VERJEE: The Dalai Lama won the Nobel Peace Prize in 1989, for championing autonomy for 6 million people in Tibet, who live under China's iron rule. But for China he's a traitor and a danger. China accuses the U.S. of gross interference in China's affairs and warns further damage to U.S. ties with China. China doesn't want the Dalai Lama to get any recognition.

JAMES LILLEY, FMR. U.S. AMB. TO CHINA: The Dalai Lama receiving the medal directly from the president, publicly, is what they call an affront to Chinese dignity and sovereignty.

VERJEE: But this latest episode is unlikely to blow apart U.S./China ties.

DALAI LAMA, EXILED TIBETAN SPIRITUAL LEADER: I determined to read my acceptance statement in English, as in something like my English examination in the front row, dignitaries, and the scholars.

(LAUGHTER)

VERJEE: He thanked the U.S. for sticking by his free-Tibet cause.

DALAI LAMA: This nation will bring tremendous joy and encouragement to the Tibetan people.

VERJEE: He even tweaked his audience.

DALAI LAMA: As a politician sometimes, maybe, a little lie here and there.

VERJEE: And was blunt in his appeal to China.

DALAI LAMA: To recognize the grave problems in Tibet is genuine grievance and the deep resentments of the Tibetan people inside Tibet and to help to the courage and wisdom to address these problems realistically.

VERJEE: Even though China's angry about this, it's really not spelled out any consequences the U.S. would face. Some analysts that we spoke to say the diplomatic as well as the economic relationship between the U.S. and China is so strong, that it doesn't seem likely that China would ruin it for this episode.

Wolf.

BLITZER: We want to talk a little bit more about the nation's highest civilian honor now being given to the Dalai Lama.

The actor Richard Gere is here in THE SITUATION ROOM.

Thanks very much for coming in.

RICHARD GERE, ACTOR: Thanks, Wolf.

BLITZER: It was quite an amazing ceremony. I don't think if you've seen anything like that before, have you?

GERE: No. It's the first time that I've been to one of these ceremonies. But to see bipartisan support and the president of the United States I thought being very emotional in reaching down deep inside of themselves and speaking about the Dalai Lama the way we would want them to speak about ourselves as Americans. As -- this is our highest aspiration.

BLITZER: You see the president of the United States, the Speaker of the House, Nancy Pelosi, and all these members and others coming together.

GERE: Elie Wiesel, I mean this was huge.

BLITZER: Elie Wiesel was there. Why, first of all, are you as passionate as you are in trying to support free Tibet and the Dalai Lama?

GERE: Well, clearly this is a people who deserve their freedom and as his Holiness says, he's looking for meaningful autonomy so their religion and culture can survive. And the onslaught of the Han Chinese and the communist Chinese government policies has been destroying them now since 1959.

BLITZER: Were you surprised at how effusive and open the president was today ...

GERE: Yes.

BLITZER: In his public remarks and the way that he actually dealt with the Dalai Lama? Because presidents often meet with the Dalai Lama but it's usually behind closed doors and no pictures or no nothing.

GERE: Well you know actually, the first president to be photographed with his Holiness was his father, was the first Bush. And, look, this president I have a lot of problems with but in terms of Tibet and HIV/AIDS, he's done extraordinary things.

But I must say not only were the speakers of one mind and one of one heart in supporting the Dalai Lama and his cause, which is a just one, supporting him as a person also. You felt the extraordinary closeness that they all felt for him and his history for him. But also in the audience there. It was a huge number. Nancy Pelosi said ...

BLITZER: I interviewed the Dalai Lama in the past. He's an amazing man. But go ahead and tell us what Nancy Pelosi told you.

GERE: Well, she said she'd at him. She'd never seen so many people one of those events, I mean representatives and senators who were that wanted to be there as part thereof event. It was deeply emotional.

BLITZER: What about the Chinese government's reaction because they are saying all these things that they are not happy about this, that there will be consequences. What do you think?

GERE: It's kind of childish. They are kind using the old-form characterizations. He's a splittist. He's, you know, kind of childish remarks.

BLITZER: He's not calling for an independent Tibet. To be part of China but should have autonomy.

GERE: The autonomy is meaningful autonomy in terms of religion and culture. You have to understand, this is a vast area we're talking about. Tibet is the size of Western Europe. And it's a very delicate ecological place. The Hahn Chinese, the Chinese government, communist government, has brought in over 6 million Chinese settlers, many of them subsidized to ...

BLITZER: To try to change the demographic.

GERE: Absolutely.

BLITZER: What do you want the U.S. government, the Congress, the executive branch, what do you want the U.S. to do?

GERE: First, what they are doing now. In harmony with all parts of our government have said, yes, this cause is just. It's in the political. It's human. It's in the area of human rights and civil rights and the will and the need, the desire, the right of all of us to practice religion, to practice our own culture in a way. The riches of China, the riches of the world demands it.

BLITZER: I'll ask you. How do you get the Chinese to change? For example, there's a Beijing Olympic games coming up this summer.

GERE: Yes.

BLITZER: Where do you stand? Because some are saying maybe it's time to think about a boycott.

GERE: Boycott is difficult to me. I don't believe in isolation. I believe in speaking the truth, and speaking the truth loudly in ever every instance. And I must say that our state department and our executive branch has been doing that.

I think forcing strongly or if you'd rather say suggest strongly the meeting between the Dalai Lama and the leader Hu Jintao in China around the Olympics would be great for Hu Jintao. It would be great for China. They have huge problems in that country in dealing with the rest of the world. The human rights abuses are well documented. The abuse of their own people and their minorities is well documented. To create a positive situation with the Dalai Lama, and this is all resolvable. These are not huge issues we're talking about. It's freedom of religion, freedom of development of culture.

BLITZER: Richard Gere, thanks for coming in to Washington. Thanks for coming in to THE SITUATION ROOM.

GERE: Thank you.

BLITZER: The current Dalai Lama is the 14th, by the way, to hold that title. He's believed by Tibetan Buddhists to be the reincarnation of a 14th century spiritual leader. In 1959, he fled to India after a failed Tibetan uprising of Chinese rule. He's lived in exile ever since.

Staging a media offensive, the embattled Senator Larry Craig blasting his recent arrest. But a colleague is blasting him back, right here in THE SITUATION ROOM. You'll want to see this.

And also, a CNN exclusive, an international manhunt takes police to a red-light district in a popular tourist resort. We'll show you what's going on. We have an exclusive report.

That and a lot more coming up in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: His arrest in a bathroom sex sting started a political storm. Now the republican Senator Larry Craig is taking to the airwaves to try to fight back.

Let's bring in Carol Costello. She's here in THE SITUATION ROOM.

So how is his new campaign playing out, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Well, you know Wolf, it depends on how you look at it. If Senator Craig thinks America believes nothing lewd happened in that bathroom, he may be disappointed. But if he wants to keep his job, his effort is paying off big time.

What's a disgraced senator to do? Seen and be seen. The lawmaker now infamous for alleged lewd conduct in an airport restroom is everywhere; at news conferences, at committee meetings, at political events.

SEN. LARRY CRAIG (R), IDAHO: I've got my whole family with me.

COSTELLO: And now he's appearing in carefully chosen, sit-down interviews, armed with talking points. Listen to what he says on Boise, Idaho's, KTVB.

CRAIG: In the middle of the season, there weren't any hurricanes. I became the hurricane; a political hurricane.

COSTELLO: The senator repeated that on MSNBC.

CRAIG: I likened it to we were in the middle of hurricane season and we were, and there were no hurricanes. I became the political hurricane.

COSTELLO: Of course, even if apologized for the incident itself, it wouldn't work for him as a conservative that votes against gay issues. Crisis manager, Eric Dezenhall, man wrote "Damage Control."

ERIC DEZENHALL, CRISIS MANAGEMENT: I think he took the hunker- down option, that I'm just going to be bullheaded and fight this and deny and deny and deny. But, you know, hunkering down can work.

COSTELLO: And so far, it is. Craig remains a working U.S. senator. Albeit one still hunkering down.

CRAIG: I am not gay. I never have been gay.

COSTELLO: He even admits to chuckling at the accusation. Telling America he gets the joke and boy have there been a lot of jokes.

LARRY KING, LARRY KING LIVE: He's not openly gay.

STEPHEN COLBERT, "THE COLBERT REPORT": He's openly gay. He used gay code when he said I am not gay.

KING: That's the gay code?

COLBERT: That's the gay code. That's why the best way to prove you are not gay is to say, I am so gay.

CRAIG: He actually laughed at one of the jokes the other day.

UNIDENTIFIED FEMALE: A Jay Leno joke?

CRAIG: It just happened to be Jay Leno.

JAY LENO, TALK SHOW HOST: We have a clip of the press conference today. Show the press conference.

CRAIG: Thank you very much for coming out today. Let me be clear, I am not gay. I never have been gay.

COSTELLO: Whether Craig really thinks that's funnily is beside the point. The point is he's still Senator Larry Craig.

Now, if you are wondering if there has been any move by senators to censure Craig, no. Any move to remove Craig from the important committees on which he serves? Kind of, but that would mean a senate vote, and that would put the whole sordid issue back in the public spotlight, and according to Dana Bash's many sources on the hill, the GOP is resigned to Craig staying on to finish his term.

BLITZER: All right, Carol. Thanks very much.

One of the first republican senators to call for Larry Craig to resign is sticking to his guns. Tonight, he's John Ensign of Nevada, the man charged with trying to get republicans elected to the U.S. Senate.

I asked Senator Ensign how he would respond to Craig's claim that he's trying to hold on to his seat and his seniority for the people of Idaho.

SEN. JOHN ENSIGN (R), NEVADA: Well, first of all, the senator said that by the end of September, the guilty plea was not overturned, if he was not re-established on his seniority on committees, that he would resign. Neither one of those things happened. Neither one of those things are going to happen. I call on Senator Larry Craig, if he loved the senate, if he loved our party, that he would keep his word.

BLITZER: Tell us why. Tell us why.

ENSIGN: Well, first of all, what is different Larry Craig versus some of the other things that we've heard lately is that he pled guilty. He pled guilty to something obviously it was embarrassing to himself, to his family, to the entire United States Senate. And I think that he did the right thing by saying he would resign. Now he should keep his word.

BLITZER: But it was a misdemeanor. People that have parking tickets and speeding tickets are misdemeanors as well. He argues you know what, it's unfair for the people of Idaho for him to take what he calls the easy path and just simply resign.

ENSIGN: Wolf, there are misdemeanors and there are misdemeanors. And this thing wouldn't be making the national news if it was an ordinary misdemeanor.

BLITZER: You don't believe. Is that what you're suggesting? You don't believe his explanation that he just didn't want the publicity, he thought he would plead guilty and no one would ever know and he would just move on?

ENSIGN: You know I think the American people kind of stand with me on this that it's pretty obvious why he probably pled the way that he did.

But the bottom line is, he did plead guilty. He pled guilty to something that lewd behavior basically in a public restroom. And that's not the kind of behavior the United States senator should be engaged in.

As far as the whole thing, he is not running for re-election anyway, so Idaho is losing that seniority, he ought to resign so that whoever steps in there can start to build up their seniority.

ENSIGN: I'm saying that you know if you listen to the tapes and you listen to all the circumstances involved, that Senator Craig, I think, had good reason to say he would resign, if the guilty plea wasn't overturned. That's the bottom line is, he pled guilty. That's why his case is so much different than any other cases we've heard.

BLITZER: But why is it so much different from David Vitter? The democrats keep pointing the republican senator from Louisiana who said he committed a sin involving that alleged D.C. call girl, that madam, the D.C. madam operation?

ENSIGN: First of all, he never said exactly what he did. Secondly, it happened before he got into the United States Senate and there were no laws broken as far as anybody knows.

BLITZER: Shouldn't the process go forward? There's a senate ethics committee that is going to look into this as far as Senator Craig is concerned. Why not let the process go forward and see what they come up with?

ENSIGN: Well, that is the process that is going to go forward now. But I think sometimes it's about more than yourself. You have to put your own ego aside and you have to do what's right for the institution. You have to do what's right for your party. And in this case, he's doing neither.

BLITZER: You're afraid that if he stays in this is going to hurt republicans across the board as far as getting themselves re-elected or elected to the senate?

ENSIGN: The longer he stays there, we certainly don't need this kind of publicity. But also the U.S. senate itself doesn't. There's too many people out there that paint with a broad brush that we're all corrupt, that we're all immoral, and having these kind of things happen, whether it's a republican senator, a democratic senator, we certainly had plenty of democrat scandals in the past. We need people who are in office to hold themselves to a higher standard.

BLITZER: Senator John Ensign of Nevada speaking with me just a little while ago.

Meanwhile, an international manhunt is focusing in on a popular tourist resort. CNN is about to take you behind the scenes exclusively here in THE SITUATION ROOM.

And some humor on the campaign trail. The talk show host, Stephen Colbert, running for president.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: An international manhunt for a suspected predator is focusing in on a popular resort in Thailand. That's where police say suspect Christopher Paul Neil previously visited.

CNN's senior international correspondent, Matthew Chance, has gained exclusive access to a Thai police investigative team as the team searches for this man.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: The go- go bars of this seedy Thai resort now the focus of an international manhunt. The sex trade employs thousands of women and men and children, too. Police say suspected Canadian pedophile Christopher Paul Neil is known ho have visited and may be here now. And these are the men determined to find him.

We gained access to a Thai police unit, scouring Pattaya's vast red-light district. Armed with photos of their suspect whose image appeared on the Internet abusing young boys, they hope someone, somewhere in the hundreds of bars here, has seen him. Police across the region, say their investigators are doing whatever they can to find this suspect. Christopher Paul Neil, has fast become one of Asia's most wanted men. And police here in Pattaya say it's in this resort where their search is now focused. Suthee is the police officer in charge and says Neil was recognized by the owner of one of the Pattaya bars, often used by foreign sex tourists.

Some months ago, Neil used services in this area, he tells me. He was definitely here. And according to police, he allegedly abused at least one Thai child now in care.

But in Pattaya, it seems, that's all too common. Back at the station, Suthee shows me a catalog of wanted pedophile suspects, photos of 50 foreigners known to the police here. And Christopher Neil, he tells me, is by no means the worst. "He's not the biggest fish, only the most infamous," he says. There are many others who committed more crimes than him.

In a town that's become a buy word even in Thailand for prostitution and sleaze, police say their hunt is for more than just one man.

Matthew Chance, CNN, in Pattaya, Thailand.

BLITZER: Let's go to Jack Cafferty in New York. He's got the Cafferty file. A lot of sick people out there, Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Yes. You know we've got a lot of good reporters working for this network of ours.

BLITZER: Matthew Chance is excellent.

CAFFERTY: That's a terrific piece.

All right. The question this hour is what should be done with the tens of thousands of armed security officers currently in Iraq.

Bob writes in Kentucky, "The use of mercenaries must come to an end. It has become obvious that they are a bunch of cowboys, answerable to no one, in violation of the fundamental legal principle that "no one is above the law." The size of the armed forces should be increased to a level that enables them to carry out the duties now assigned to these mercenaries and if this requires a draft, so be it."

Sam in Washington, "Sovereign is sovereign. If we want a sovereign and democratic Iraq, we have to respect the wishes of their democratic government. They want Blackwater and the others out. We can't have it both ways: call it sovereign when they agree with us and treat them like a puppet when they don't."

Ian in Los Angeles, "The first thing the media needs to do is to start calling them what they are, mercenaries. Contractors repair your house. They don't shoot you."

Will in North Carolina, "Let's put the Blackwater contractors where they'll do the most good, the U.S.-Mexican border." Robert in Arizona, "No republic worthy of the name needs mercenaries. If our military is unable to provide security, we need to expand our military. The existence of private armies can only be destructive to freedom, both here and in Iraq."

Dan in Mississippi, "Pay the mercenaries the same salaries that our troops receive and they will be on the next flight home."

Darren in Michigan writes, "Would trying them for their war crimes be too much to ask?"

And R.A. in La Porte, Texas, "Leave them there and bring the troops home."

If you didn't see your e-mail here, you can go to CNN.com/Caffertyfile. We post more of them online along with video clips of the Cafferty file.

Wolf.

BLITZER: Jack, thank you. Thanks very much.

Let's see what's coming up right at the top of the hour. Rick Sanchez standing by.

Rick.

RICK SANCHEZ, CNN ANCHOR: You know, that young lady who was in Congress, she was telling Congress about her ordeal and how to make sure as parents we need to protect our kids. I had a chance to talk to her, Wolf. Amazing story, her name is Alicia. She was literally kept in a dungeon for days until finally she was rescued. Every single person who has kids and grandkids and worried about them getting on the Internet and taken away, should watch this interview.

Also, a couple of big decisions today as far as immigration is concerned. One of them is about a school that has decided that you should only speak English there, all right, no Spanish. They're serious about this. This is one that hits close to home for me. You know what, I think they're right. And we'll be breaking this "OUT IN THE OPEN." And I'll explain it to you.

Wolf, back to you, my friend.

BLITZER: All right, Rick. We'll be watching. Thanks very much.

And watch out Hillary Clinton and Rudy Giuliani, the race for the White House just got a little bit funnier. Stephen Colbert throwing his hat into the ring.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Stephen Colbert has made a name for himself by spoofing TV news, politics and the pundits that travel both worlds. Now Colbert is taking his shtick to a most unusual level.

Here's CNN's Jeanne Moos.

JEANNE MOOS, CNN CORRESPONDENT: He was as coy as the real McCoy as any real candidate.

UNIDENTIFIED MALE: You may have an announcement?

COLBERT: Do I? Should I?

KING: Are you thinking about running for the big one?

COLBERT: For god?

MOOS: God help us, Stephen Colbert, a pretend right-wing pretentious pundit announced on "The Daily Show" that she was considering running and might announce soon.

COLBERT: Preferably on a more prestigious show.

MOOS: His own, minutes later.

COLBERT: I am doing it!

MOOS: And we hear he's not totally kidding. Colbert will be filing paperwork to get on the presidential ballot in his tome state of South Carolina. The state's public TV network has offered him airtime on one of its main shows. "E-TV would like to help in whatever way we can to assist Stephen in his pandering." Colbert will be joining the likes of Grandpa Munster who once ran for New York governor.

PAT PAULSON: I always felt that a politician should be sincere whether he needs it or not.

MOOS: And if you really mean to get attention, a fringe candidate can wear a boot on his head. This guy calls himself Vermin Supreme. It's his real name is on his license. He says if all politicians are vermin, voters will vote for the best vermin, hence the supreme. His platform called for mandatory toothbrushes.

VERMIN SUPREME: We are calling forth a holy war.

MOOS: Global war on plaque. Attacks on breast implants was among the proposals of adult film star Mary Kerry.

MARY KERRY: I'd like to be governor of California.

MOOS: She managed to get about 10,000 votes spouting policies like turn in your pistol in exchange for porn.

KERRY: Trading in their pistols for pornographic movies, they'll be calmer. Everyone's calm after they watch a porno.

MOOS: Candidate Colbert may not be calm when he sees this.

Would you consider voting for Stephen Colbert?

UNIDENTIFIED FEMALE: Who is that?

UNIDENTIFIED FEMALE: I have no idea who you're talking about.

MOOS: Stephen Colbert.

UNIDENTIFIED MALE: I don't know him.

UNIDENTIFIED FEMALE: Who is Stephen Colbert?

MOOS: At least Colbert is running as democrat and a republican.

COLBERT: I could lose twice, Larry.

MOOS: As for possible running mates ...

COLBERT: Colbert/Putin.

MOOS: But running for president can be a thankless ...

UNIDENTIFIED MALE: No thank you.

MOOS: Task.

Would you vote for Stephen Colbert for president?

Jeanne Moos, CNN, New York.

BLITZER: I don't think he will.

Mark your calendar. Starting November 5th, just one year from Election Day 2008, THE SITUATION ROOM will be on three hours back to back from 4:00 p.m. to 7:00 p.m. eastern. "LOU DOBBS TONIGHT" will air at 7:00 p.m. eastern. That starts November 5th.

I'm Wolf Blitzer in Washington.

Up next, Rick Sanchez with "OUT IN THE OPEN."

Rick.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com.